Ask most New Yorkers what the value of Times Square is and you are likely to get a baffled shrug.

With its ersatz glamour and blinding neon, Times Square distracts from the true wonders of this mesmerising city, corralling tourists like moths around a cheap light bulb.

Indeed, there is only one good reason to spend any time in Times Square: the theatre.

Broadway and Times Square are almost synonymous. Many of New York's grandest temples cluster in its side streets, and hoteliers have recognised the powerful allure of the proscenium arch for years.

The Paramount Hotel, for example, was constructed in 1928 to appeal to visitors coming to New York for its vibrant nightlife.

It employed the renowned theatre architect Thomas Lamb to create a flamboyant French Renaissance design that blurred the line between hotel and stage set. Even in the 1920s, Broadway made a market from excess.

Like much of the Times Square district, the Paramount fell into disrepair during the following decades, but a refurbishment has captured something of its original glory.

The marquee has been resurrected. The dark wood lobby now throbs with the sounds of a resident DJ. There is an imposing fireplace, a bouquet of driftwood, and a whole suite of shiny furniture curated by Meyer Davis Studio.

The operative adjective is "dramatic". Is it too much? That would depend on your attitude to theatre. If you appreciate spontaneous outbursts of emotion through song - appreciate Broadway, in other words - then welcome home. This is your element.

The rooms are low key by comparison, but nobody wants a chorus line when you are trying to sleep. Mine is a corner room, in muted whites and greys, with one window facing north over a water tower and another facing west into a private apartment - a show of a different sort.

The only ostentatious touches are a fish-eye mirror and a faux-snakeskin lampshade. The rooms, in sum, are exactly what you want in a sea of overstimulation: they are isolation tanks. Although the Paramount is not a luxury hotel, it offers comfort in all the right places.

But wait. You know how theatre sometime lulls you into a false sense of security before pulling the rug out from beneath you? There is a moment when everything seems to be resolved, the protagonist settles into satisfied bliss, and then a phone rings.

"We've managed to squeeze you in, so if you'd like to come downstairs ..." says the voice on the other end.

In 1938, the theatre impresario Billy Rose opened a vaudeville showroom beneath the Paramount. The New York Times called the Diamond Horseshoe "the gayest frolic on Broadway".

Frank Sinatra and Gene Kelly graced its subterranean space, which maintained a reputation of delirious revelry until it closed in 1951. The ballroom has sat silent until this past New Year's Eve, when the Diamond Horseshoe turned on the music again.

It is difficult to overstate the strangeness of what dwells beneath the Paramount. You descend past debris - broken pieces of scenery, construction smoke, a shattered chandelier - into a pulsating room that is part Eyes Wide Shut and part Moulin Rouge fever dream.

Officially, it is a dinner show called Queen of the Night, "a dark debutante ball thrown by the Marchesa for her daughter, Pamina", directed by Christine Jones with costumes by Thom Browne. Officially, it is also based on The Magic Flute, but officially: whatever.

When I walk into the ballroom, I am confronted with several hundred people in fancy dress swirling to heavy techno music, while leather-clad servers slam cutlery on to tables. Some of the people are dangling from the ceiling.

The next two hours are a hypnotic, sensuous blur - "sensuous" in the literal meaning of the term, because you are often touched. Strangers are cajoled into kissing after swallowing Sichuan peppers.

Somebody massages my shoulder, while the woman opposite gets a lap dance and her friend serves himself lobster out of a birdcage.

If you have ever wanted to throw your dinner plate, steal food from somebody else's table or be spoon-fed dessert by a scantily clad muscle man - again, welcome home.

As an interactive theatre experience, Queen of the Night resembles Sleep No More, that New York smash hit in which the audience wanders through an "abandoned" hotel and participates in a fractured retelling of Shakespeare's Macbeth.

Such shows destroy the fourth wall, meaning that there is no separation between actor and observer. It is either confronting or exhilarating, messy or inspired. While at my table, I am splashed with juices from beef ribs and showered with confetti as it flies from a woman's untamed hair.

Most of the time I have no idea what is going on. Even escaping to the bathroom offers little respite: the lighting turns blood red and magic wallpaper reveals a thousand tangled snakes.

"Relax," says my waiter, after asking me if I have ever been in love. "I would," I reply, "but you're holding my hand."

Then, like a hallucination, it ends. I climb out of the basement, past the debris and construction work, through the lobby, go up in the elevator with its theatre mural, and back to my gloriously banal isolation tank. The curtain falls.